Can a Tenant Pay Rent in Advance and Then Stop Payment on the Check if He Decides to Terminate the Lease?

If a lease provides for a rent due date and the rent is paid in advance, is it reimbursable if the lease is thereafter terminated? That issue was considered by the New York State Court of Appeals in Eujoy Realty Corp. v. Van Wagner Communications, LLC 2013 WL 6164508 (Nov. 26, 2013).

In that case, the lease explicitly provided that the tenant would pay the rent in advance for a full year. The lease also provided that the landlord was not required to return any of the rent if it was terminated for any reason. In 2007, the tenant paid $96,000+ for a full year of rent in advance. However, the tenant claimed that the payment was sent in error and that it wanted to terminate the lease.

The Judge ruled that rent paid in advance is not recoverable if the lease is terminated prior to completion of the term. The exception would be if the lease were to provide otherwise. In this case, it did not.

The Court also explained that the tenant was a “sophisticated and counseled” business, and thus it could have bargained for what it wanted when drafting the lease. Therefore, the Court would not require the money to be reimbursed.

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